Madison Square Garden Sports Corp.

Good morning. My name is Teresa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Madison Square Garden Sports Corp Fiscal 2021 Second Quarter Earnings Conference Call. At this time, all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. I would now like to turn the conference over to RE Dennis, Investor Relations. Please go ahead, sir.

Thank you. Good morning and welcome to MSG Sports Fiscal 2021 Second Quarter Earnings Conference Call. Our President and CEO, Andy Lustgarten, will begin this morning's call with an update on the company's operations. This will be followed by a review of our financial results with Victoria Mink, our EVP, Chief Financial Officer, and Treasurer. After our prepared remarks, we will open up the call for questions. If you do not have a copy of today's earnings release, it is available in the investor section of our corporate website. Please take note of the following. Today's discussion may contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties, and that actual results, developments, and events may differ materially from those in the forward-looking statements as a result of various factors. These include financial community perceptions of the company and its business, operations, financial condition, and the industry in which it operates. as well as the factors described in the company's filings with the Securities and Exchange Commission, including the sections entitled risk factors and management's discussion and analysis of financial condition and results of operations contained therein. The company disclaims any obligation to update any forward-looking statements that may be discussed during this call. On pages four and five of today's earnings release, we provide consolidated statements of operations and a reconciliation of operating income to adjusted operating income, or AOI, a non-GAAP financial measure. And with that, I will now turn the call over to Andy.

Thank you, Ari, and good morning, everyone. I'd like to begin by saying that we're excited to have both the Knicks and Rangers back in action. Even though the season started later than usual, and our fans can't be at the garden in person, we know they are enjoying watching their teams compete again. And while the COVID-19 pandemic still presents operating challenges in the near term, we are paying close attention to the vaccine rollout and what it means for the return of normal operations. Since our last earnings call, there have been a number of positive developments for both our company and the leagues. The NHL and NBA completed their 2019 seasons. The success of each league's return to play clearly demonstrated the shared commitment and strong working relationships that both the leagues have with their teams, players, and partners. This was followed by the 2020 NHL and NBA drafts. during which both the Rangers and Knicks made key additions to their rosters. The Rangers used their number one overall pick to select Alexis Lafreniere, a dynamic forward with the potential to become an all-star player for the team. And the Knicks finished the draft welcoming two talented first-round picks, forward obi tobin who last season was named college basketball player of the year and guard emmanuel quickly who is named the 2019-20 sec player of the year the knicks and the rangers each have a talented young core and strong leadership in place and we look forward to watching them progress over the 2021 season we are also excited that the teams have to return to the world's most famous arena for the first time since March, with December marking the start of the NBA's 72-game regular season and January the start of the NHL's 56-game season. And while home games at the Garden are currently being played without fans due to government restrictions, we are working towards safely welcoming guests back into the building as soon as possible. In addition to watching select markets where the NBA and NHL are hosting games with reduced fan attendance, we are also following developments in New York State, including the Buffalo Bills hosting limited crowds for their two playoff games. We are obviously interested in what the success of these events could mean for the Knicks and Rangers fan attendance when the time is right. Until that happens, we are seeing a number of signs that illustrate just how eager our fans are to cheer on their teams in person. For example, even with the current uncertainty and a fan-friendly refund policy, we have a combined Knicks and Rangers average season ticket renewal rate of approximately 75%. And for those who have not renewed, we are optimistic that many will reconsider once we are through the pandemic. Nevertheless, between renewals by our existing customers and the sale of season ticket packages to new customers, we are very pleased with the level of interest we are seeing and are grateful to our loyal fans. We have a strict fan-first policy, which in the current environment has been about providing Knicks and Ranger ticket holders with significant flexibility. This includes pausing season ticket payments and requiring only a minimal deposit to maintain season ticket member status. We continue to be thankful for the support of our fans who, despite not being able to attend games, have remained passionate about their teams. As just one example, after launching the Rangers' new 2020 Statue of Liberty retro jerseys in November, they quickly became one of the best-selling jerseys in the league. And while it is still early in the seasons, we've been pleased with the local and national ratings to date, which we believe creates opportunities for our leagues as national media rights come up for renewal over time. As a reminder, the NHL's U.S. national media deal expires after the season, and its Canadian deal ends after 2526. The NBA's media agreements expire after 2425. And while we remain confident that the fundamentals of our business are strong, we have taken steps to further strengthen our balance sheet until regular operations can resume. In November, we completed a $600 million debt refinancing, which enhanced our financial flexibility through an extended maturity schedule and increased borrowing capacity. Victoria will provide more details shortly. As of December 31st, we had over $290 million in liquidity between cash on hand and availability under our credit facilities. Our quarter and cash balance included $30 million from the NBA, which it provided to each team following the league's $900 million private placement in December. Last month, The NHL completed its own debt rates of $1 billion in order to provide additional liquidity to the league and teams. And we may look to access our portion, which is approximately $30 million to further enhance our cash position. The NBA and NHL's ability to raise these amounts on attractive terms during such an uncertain period is a great illustration of the confidence in the long-term outlook for both leagues.